if connected

update 7.12pm – This is even worse. Now VirginMedia are claiming “The UK’s fastest broadband is fibre optic and it’s only available from Virgin Media.” !!!!! and: “Virgin Media is the only place to get fibre optic broadband, and the good news is more that half the homes in the UK can get it.” !!!!!!
Reality: Half the UK’s home are reached by HFC (see below), no homes are reached solely by fibre outside of a very small scale trial. Note to ASA – JupiterResearch has very reasonable consultancy rates.
[original post is below]
I’m astonished that VirginMedia has escaped sanction by the ASA this time. (read my original blog entry on the advertising here: Truth, Lies and Broadband, which includes a photo of one of the misleading adverts).
Virgin’s Hybrid Fibre Coax (HFC) network — the standard cable network tech used worldwide — is not fibre, despite Virgin’s advert’s strong implication, and regardless of the ASA ruling. The ‘coax’ part of the name means that the data traffic of their customers passes over a shared capacity coax cable along the street on the way from a home to a street cabinet which greatly reduces performance at busy periods, unlike DSL (where the last mile connection from a home to the telephone is not shared with anyone else and so is actually superior in that regard to HFC).
Plus, as everyone in the UK ISP industry knows, VirginMedia has had a tight usage policy and has had explicit traffic limitations during peak evening periods (latest)whereby consumers that exceed a given usage limit see their speeds reduced by VirginMedia’s equipment (plus several outages, and more).
If consumers are (mis)led by adverts now, and believe Virgin that Virgin’s network is really “super duper fast fibre-optic broadband” then there is no way that those consumers will understand the difference when a UK ISP finally launches a real fibre network (as is happening elsewhere in Europe now).
The ASA is just increasing opacity in the market, making it harder for consumers to understand what packages deliver good or bad broadband, and so whether the price represents value for money. This opacity benefits no ISPs in the medium term: The result will be that consumers will continue to be price sensitive, they will continue to opt for the cheapest broadband deal available, resulting in lower broadband revenues and profits for all UK ISPs, including, ironically, VirginMedia.
And, as a result, UK consumers will have to wait even longer for true fibre as low broadband revenue per user will make the business case for fibre investments much more difficult.

This is going to be the first in a few entries on ISPs’ wild and confusing claims for their broadband service….
First up are the European cable companies that are jumping on the fibre bandwagon and implying that their service is similar/the same as the fibre to the home (FTTH) services launching in France and elsewhere.
Background: traditional cable networks use HFC technology which stands for hybrid fibre coax. In simple terms what this means is: Fibre runs to near the consumer’s home — like a street cabinet — and then a copper core coax cable runs down each road with branches into customer homes. The coax is shared capacity for broadband: the more capacity one house uses the less there is for neighbours.
Several European cable operators are now using the word ‘fibre’ rather too prominently in their corporate backgrounders, investors beware, and even in the case of Virgin Media in their consumer marketing. Virgin’s current poster campaign proclaims:

Truth, Lies and Broadband
Hello,
There are lots of companies out there selling ‘high speed’ broadband, claiming to be the fastest and cheapest in the land.
The truth is this… right now, in terms of broadband, there are two types of home in the UK.
Half of us can get cable broadband. This is delivered via a fibre optic cable — meaning it is officially the fastest and the best performing broadband available.

[My emphasis. It goes on in a similar vein.]
The key word in the above text is “via”.
This usage of the word ‘fibre’ is highly misleading and confusing. The service of ADSL broadband consumers will also go via fibre at some point, typically from the telephone exchange onwards, so what’s the actual difference??? Also, unlike cable’s HFC, ADSL uses uncontended (ie unshared) copper between the consumer and the telephone exchange, unlike cable’s shared coax running around the street. So, although telephone line quality and distance matter for ADSL there are some advantages for ADSL over HFC.
Bottom line: The most important bottleneck for broadband performance today, is not the technology that delivers the connection to a house, but the overall network capacity that ISPs allow throughout their network. And, as ISPs are cutting consumer broadband prices, they have less incentive to invest in such network capacity.
Going back to Virgin, briefly, their earlier radio advertising campaign was even worse:

You can now get Virgin Broadband for just £10 a month and it’s not just any old broadband. It’s unlimited super duper fast fibre-optic cable broadband or in other words broadband that doesn’t use copper wire like most providers and doesn’t slow down no matter how far you live from the telephone exchange.

Arghhh.
In my opinion, the word via is not enough to fix the message from the July radio adverts for the current print campaign and make the message clear. The word via just results in:
Truth, Lies, Ambiguities and Broadband

The current Virgin Media poster:

Virgin Media’s quadruple play of tv, broadband, home telephony and mobile has had tremendous industry expectations placed upon it, especially from US-based investors and companies. Unusually, Virgin Media also operates off-net — outside the coverage of its cable network — where it delivers DSL broadband and CPS telephony today, and plans IPTV in the future.
Today, Virgin Media announces its second set of results since the re-brand.
First takes:
Biggest success for the quarter is the V+ combined DVR and HDTV box. Subscribers increase from 114,200 to 166,800. Especially impressive given the rough quarter for broadband and TV additions.
Solid triple play progress: Now, 45.2 percent of customers take three services, up from 37.1 percent a year earlier. But cable churn increased to 1.8 percent in the quarter, from 1.6 percent in q1 2007.
Poor broadband additions: just 45,800 cable broadband additions in the quarter. Satellite TV and DSL rival Sky, added 259,000 broadband customers in the same period.
Virgin explains weak broadband numbers by citing problems in its TV product range. Could multiplay be increasing churn for bundled services? (something we analysed earlier this year, most specifically slide 4 titled, “The Vicious Competition Circle Will Drive Multi-play and Increase Overall Market Churn“). What Virgin says under the sub-heading ‘Broadband’ is: “On-net broadband net additions in the quarter were 45,800, down from 87,900 in the previous quarter. Growth in the quarter was negatively affected by increased churn relating to the loss of the Sky basic channels.”
Good usage of VOD by Virgin Media customers. Important to note that free VOD is being used as a differentiator by Virgin, so this VOD usage will not translate directly into revenue unless Virgin can shift free VOD behaviours onto paid VOD. Regardless, 44 percent of customers using VOD, compared with 36 percent at the start of the year, demonstrates steady progress. Virgin’s challenge is whether it can continue to use VOD as a distinctive part of its offer given Sky’s aggressive move into DSL (and on the back of that eventually into IPTV and VOD) and the launch of free catch-up TV services from the BBC and Channel 4 which are available to any UK broadband household.
Re-confirmation of Virgin’s plans to launch IPTV off-net. But no timescale. Given Virgin’s mobile offer is national, it is important for Virgin to have a solid at home offer outside its traditional cable areas if the company is to leverage the quadruple play fully. Additionally, Virgin will hope that bolstering its off-net service may help customer retention when consumers move house to outside the cable footprint. Virgin’s challenge here is that the UK TV market is becoming very congested: There are existing IPTV offers from BT and Tiscali, Orange has advanced plans, and Sky is a player here too. Plus the multichannel digital free to air service, Freeview, continues to perform very strongly.

Virgin Media launches today. It’s the new brand name for UK cable operators ntl and Telewest, as well as MVNO Virgin Mobile.

To succeed the company must re-position UK cable as an exciting, innovative player with a reputation for good customer service. They must move cable away from marketing bundles on price. Instead, they must enhance services for consumers that choose to take the bundle. If not, the danger for Virgin Media is that will acquire low value customers attracted by the bundle’s price, and will be more likely to churn in the future to competitive cheap services.

There is consumer interest in multi-play, even for quad play bundles in Europe — Jupiter clients should please ask us for the figures and target segments — but there are a number of companies offering services to meet the demand, its not just cable launching bundles: from mobile operators like Orange and Vodafone; to telecoms incumbent BT with its on demand TV, DSL and mobile service; through to the leading pay TV operator in the UK, Sky. Of these, BT offer all four parts of the quad play, Sky market three (not mobile for now), and Orange and Vodafone offer three (not home TV yet). Even Tesco, the UK’s leading retailer, offers own-brand DSL, home telephone and is an MVNO.

Despite Virgin Media’s talk of using quad play as a differentiator, the reality is that it simply isn’t. This is no longer a 1990s world where the only operators able to do such bundles were using cable technology. Local loop unbundling, the success of DSL broadband, mobile virtual network operators, carrier pre selection and wholesale line rental have changed all of that.

Virgin Media in its heart knows this, that’s why its quad play was hurriedly announced last autumn, ahead of the re-brand due to market pressure from other operators announcing multi-play bundles.

Virgin has to innovate. Today’s announcements of a new subscription video on demand TV channel should be just the start if Virgin Media is to turn around the fortunes of the UK cable industry.

So, UK cable operator ntl plans to buy Virgin Mobile, a UK MVNO. Good analysis piece on BBC News.
For ntl this could prove to be a major distraction. Post mergers, they will be operating a cable network, an ADSL ISP and now a mobile network that is based on someone else’s mobile infrastructure (T-Mobile).
Not content with fierce competition in broadband Internet access (Wanadoo, BT, Pipex, Tiscali, Be, Sky/Easynet etc.) or telephony (Tele2, Carphone Warehouse, BT, etc.) or the digital TV market (BSkyB and Freeview) they are opening a new front in the UK’s incredibly congested mobile market (five infrastructure-owning mobile networks plus several major MVNOs). In wartime, countries are usually advised to limit the number of fronts on which they fight; ntl clearly believes business is not like warfare. I wonder who will tell BSkyB?
At the same time as operating in these four competitive markets, ntl will be hoping to deliver cost reductions through re-organisations and rationalisations both between ntl and Telewest, ntl and Virgin.net and now with Virgin Mobile as well. This will be a massive task.
As I wrote on the Sky/Easynet deal, this is more evidence of multi-play: providers are using multiple networks to deliver entertainment, communications or access services. This usage of multiple networks offers flexibility, but has capital and operational cost implications. Choosing the right brand is a key decision point and ntl will surely hope to use Virgin as well as ntl. There is a real risk of consumer confusion if the branding for this varied product portfolio is not well thought out. More detail on our take on these emerging multi-plays is in this JupiterResearch report.

Multi-country cable owner, Liberty Global increased its stake in Belgium’s Telenet (pdf). Following Liberty’s recent acquisitions of Switzerland’s Cablecom, Ireland’s Chorus and ntl (subject to competition authority approval), and of France’s Noos last year.
Who’s next? ComHem? ntl/Telewest? AOL? (joking)
European cable is consolidating and its no surprise that the driver is an American company with American sources of funding. European markets remain tough for cable players, as they’re battling fierce competitors on all three of their self-chosen fronts:

• Broadband vs DSL
• TV vs satellite and digital terrestrial and IPTV,
• Telephony vs CPS and DSL VoIP.

For consumer data on interest levels, forecasts and analysis of VOD in the UK and Europe read this just published Jupiter report: ‘TV on Demand – DVR, VoD, and HDTV Prospects in Europe, Vision Report, January 11, 2005. This also cover the VOD prospects for IP TV operators like the UK’s Homechoice.
Press releases:
- Telewest Press Release: Telewest Broadband launches first wave of TV-on-demand services with FilmFlex
- NTL and Telewest Broadband Launch Video-on-Demand Services in United Kingdom with SeaChange; SeaChange Anchors Commercial VOD Roll-Outs in Europe